Startup India 2.0? Govt Extends Recognition to 20 Years

India’s startup ecosystem has received a major policy upgrade. In February 2026, the government expanded the Startup India definition to formally include deep technology startups, recognising their long research cycles and high capital needs. The move extends the recognition period from 10 to 20 years and offers tailored benefits to research-driven firms. This reform marks a shift from short-term scalability to long-term innovation, strengthening India’s ambition to become a global technology and knowledge hub.

What Has Changed in the Startup Definition

• For the first time, the government has created a separate regulatory category for deep tech startups.
• While regular startups continue to enjoy recognition for 10 years with a turnover cap of ₹200 crore, deep tech firms will now be recognized for 20 years with a higher turnover ceiling of ₹300 crore.
• The revised framework acknowledges that deep tech companies require longer gestation periods, higher R&D spending, and sustained innovation before commercial success.

What Qualifies as a Deep Tech Startup

• According to the new rules, a deep tech startup must be built on new scientific or engineering knowledge.
• These firms should demonstrate a high proportion of expenditure on research and development and must own or be developing novel intellectual property with clear plans for commercialisation.
• This clear definition brings regulatory certainty to sectors such as AI, robotics, clean tech, advanced materials, biotech, and space technology.

Recognition Process and Exit Conditions

• Startup recognition will continue through the DPIIT portal.
• Applicants must submit incorporation documents and a write-up explaining innovation or scalability.
• Deep tech startups will need to provide additional proof of R&D intensity and IP creation.
• Regular startups exit the framework after 10 years or crossing ₹200 crore turnover, while deep tech startups lose recognition after 20 years or exceeding ₹300 crore, whichever comes earlier.

Tax Benefits and Use of Funds Rules

• Recognised startups, including deep tech firms, can apply for income tax exemption under Section 80-IAC of the Income Tax Act, subject to approval by the Inter-Ministerial Board.
• However, the revised framework tightens fund usage rules. Startups are barred from investing in residential real estate, speculative assets, non-core loans, luxury items, or unrelated securities, ensuring funds are used strictly for innovation and core business activities.

Importance for India’s Innovation Ecosystem

• This policy shift reflects the government’s recognition that breakthrough innovation takes time.
• By supporting deep tech startups for longer periods, India aims to encourage homegrown intellectual property, reduce dependence on imported technologies, and build globally competitive firms.
• The move aligns with national goals of Atmanirbhar Bharat, advanced manufacturing, and becoming a technology-driven economy by 2047.

Question

Q. Which department issued the notification expanding the Startup India definition?

A. Ministry of Finance
B. NITI Aayog
C. Department for Promotion of Industry and Internal Trade
D. Ministry of MSME